Monday, August 4, 2014

ROSE Q2 Earnings

Rosetta Resources announced earnings for the second quarter of 2014 today after the close. the company reported adjusted diluted earnings of $0.82 which is down $0.02 from last year and considerably below our estimates of $0.93. Revenue was reported at $220.9MM, down 7% compared to $236.5MM last year, also below our estimates of $267MM. I have to say, disregarding the numbers, the company did have a strong record performance this quarter. They were hit hard by unrealized derivatives during Q2, ( I will find more information on an explanation for this during tomorrows conference call) if you exclude this unrealized derivative, revenues came in at a record $264.6MM compared to $193.8MM last year, which is much more inline with our initial estimates. Some highlights in the quarter include the six horizontal wells completed in the Delaware Basin, well costs in the Eagle Ford region were reduced by 10%, increased total daily oil production by 56& to 19.0 MBbls/d over last year and 18% sequentially. I think the most important bit of information from the release is the fact that they saw a 14% sequential growth in Permian daily oil production. Due to the strong performance this quarter, the company updated its guidance for FY2014 production by 3 MBoe/d to a range of 63-66 MBoe/d, representing a 30% production growth year-over-year. I will post a follow up blog tomorrow with more information on the unrealized derivatives that hurt both the company's top and bottom lines.